[nness]

I don't understand this model. Such significant layoffs would indicate that there is no real appetite for expansion or growth.

Their goal might be be to acquire, dramatically cut costs, and then run the product for as long as they can at a profit before breaking it down and selling it off (or hope for a buyout by a bigger player.) But that wouldn't make sense — customers of a depreciating SaaS product surely churn after a 1-3 years, so they wouldn't make enough of a return from their existing customers to justify the investment...

[jjice]

Yeah this is what I think Bending Spoons does, mostly based on the Evernote situation.

Product has paying users and it's in a "complete" state. Cut costs to optimize profit for a bit and hope not everyone leaves.

In the case of Evernote, it's probably really hard to get 10 year users off of it at this point, so they can double subscriptions and they're locked in. My assumption is that there's a serious amount of people that go "eh" and just deal with the cost increase and stagnated features.

[WJW]

It was like that with WeTransfer too. Fine company that had been profitable for years, but with little hope of getting ever 10x bigger again. I used to work there and had already left by the time of the acquisition, but all the old colleagues I've spoken to said the same.

The main business was throwing off gobs of money and there were SO MANY failed projects to try and find new revenue streams. Everyone who was not being pushed by the PE owners could see that they would never account to even 1% of the revenues of the main product. It was only a matter of time before someone came in, said "the main business is fine as is" and fired the people who were involved in the moonshots then sat back and raked in the cash. Sure, it will probably not last forever. But if it brings in millions per year for 15-20 years until the company dies, then that is probably an outcome Bending Spoons is fine with.

[johnnyanmac]

For a hosting space like Vimeo, I'd be surprised if this gave them 5 years. And remember, they acquired Vimeo for over a billion dollars.

This isn't like some B2C 5-10 dollar a month service. Video hosting is notoriously expensive and paying clients will quickly see other alternatives if they see smoke. These are already people with specialized needs that the main market leader (Youtube) cannot fulfill. They are "active", so to speak.

[csallen]

> These are already people with specialized needs that the main market leader (Youtube) cannot fulfill.

Isn't this just a bigger reason why these people won't leave? Assuming the acquirer isn't dumb enough to remove the core benefit that comes from their highest paying customers, they will keep providing those, and those customers won't churn. And I think this is a safe assumption, considering it's the primary goal and focus of the people at the acquirer.

[johnnyanmac]

My TLDR response here would be this: Vimeo isn't Evernote and people are paying a lot more to expect more. The nature of this means that smaller bits of "product rot" will push them away faster than what a consumer would tolerate. These are already people who needed to deliberately avoid Youtube, so they aren't afraid to migrate again if needed.

There's also a lot more competition with Vimeo than there is with YouTube. So options exist to find.

----

But I'll break down my thoughts further. I'm familiar with the scene (a lot of artists use Vimeo for their portfolios, as well as working with clients on NDA content), but not intimate. So I'd love someone for me to call me out here. But:

There's 2 lenses here. Your lens implies Vimeo is the best service in this niche space, that reducing down the staff count to a skeleton crew will keep it as the most competitive option, and that as long as this isn't disrupted that it'll be business as usual. And we'll be charitable and assume this doesn't enshittify. Those are all valid points. I'm much less charitable, but I can still work in this lens for the sake of argument.

The lens I'm looking in is more at the type of person using Vimeo, not the type of business Vimeo runs. Compare this to Evernote. It's a lot closer to Twitter or Facebook, where remaining users will use it simply because "it's familiar" more than for any competitive edge. It has everything you need, and even if costs rise, we're still talking about one lunch outing per month. It's a "sticky" product benefiting from previous goodwill and marketing.

The people on Vimeo aren't "sticky". They are closer to the type of person who leaves Windows for Linux because Microsoft keeps pissing then off. In fact it's more like they are Linux users who jump around from distro to distro because they already forsook the market leader. They are "actively" on the move and aware of the tools they use. Given that Vimeo is a highly premium service when you use Enterprise, you need to be active. You don't want to be on a sinking ship and have your work crash with it.

So I see two roads here. Some users will stay "stuck" because maybe nothing else does compared to Vimeo. Or because some larger pipeline relies on Vimeo and it's beyond their control. Then some users will be either leaving to another service, or actively keeping an eye out for competitors in the near future. That's what I see as "different" here.

Now, taking my charitable lens off: I do think there will be a lot of small issues pushing people off, and then a few huge ones. Small things like site performance degrading as they scale back server, and worse support as they slash labor. Then the larger things will truly push people, like a price hike, change in monetization models, or failing to honor any deals made pre-bending spoons. Or even a huge data leak. Those things, big and little, break the foundation of a trusted business.

[breakingcups]

Since Vimeo owns the customer billing relationship in a lot of their whitelabel B2B business, migration would be a pain, especially when compounded by a massive amount of data needing to be re-ingested. I think those customers will tolerate a reasonable amount of rot before starting to move and that the timescales would be long.

[csallen]

Totally reasonable take, thanks for going in depth.

[aetherson]

I mean, if your argument is, "Bending Spoons made a bad investment," then sure, okay. That's not implausible! Companies make bad investments.

But I don't really see what overall lessons there are here.

[johnnyanmac]

>But I don't really see what overall lessons there are here.

So many chains to keep up with. There wasn't really a lesson here. Just "Vimeo is not Evernote"?

My wider lesson unrelated to this chain is that US at will employnent sucks and we need to overhaul it. You don't create a trusting career by treating employees like toys to discard.

[aetherson]

The US has enriched a vastly larger number of software engineers through at will employment that Europe has through making it very hard to fire people who aren't adding value.

[aetherson]

And honestly this is probably fine. If the main business can't grow and there have been a few years of attempts to produce complementary businesses with no success, that's a good sign that the business should be moved into a "return money to owners" model.

[johnnyanmac]

Sadly, "return money to owners" ends more like the owner selling off the company and leaving all the workers under them in freefall. And people wonder why loyalty is dead.

[philipallstar]

Well, the workers already got paid for their time; the owner didn't for their time and (more importantly) risk.

No one wonders why loyalty is dead.

[johnnyanmac]

The owner got a big pay package from the sale on top of usually being one of the more highly compensated employees at such companies. What do you mean by "the owner didn't get paid"?

>No one wonders why loyalty is dead.

I see you missed the recent narrative of "Gen Z is lazy" and "most managers avoid hiring Gen Z" out there. I assure you many managers are baffled, bit blame the (relative) children instead of seeing how work culture has shifted since they were that age

[toomuchtodo]

This is correct. You're buying a cashflow. Bending Spoons has optimized their model for very specific types of cashflow enterprises to aggregate into their portfolio.

[rickydroll]

I use Harvest to track hours and expenses and to invoice my customers. Bending Spoons apparently bought them a while ago and just eliminated the shell company around Harvest.

Based on my experience with Evernote, I don't trust Bending Spoons, and I'm wondering if I should look for a different time-tracking and invoicing system.

[dwedge]

I've been in the same boat as you and replaced it last year but still pay for harvest (grandfathered pricing) until I can be sure I don't need it. I'm almost up to renewal and haven't used it at all since trying app.solidtime.io

I'll be honest it's not as good as harvest. The mac app is a bit buggy, it's not as easy to add manual time, and you need to pay for pdf export. But having said that I've found the free version to cover 90% of my use of the paid version of harvest

[burningChrome]

I use Harvest for my freelance invoicing and started seeing the huge notice at the top of the app and was wondering how this was going to impact my stuff going forward. I'm also very leery having gone through a horrible Evernote experience.

If anybody has any good alternatives, I'm all ears.

[toomuchtodo]

Yes.

[skrtskrt]

It would be nice if there were a common way for essentially feature-complete SaaS businesses to carry on and maintain some expected level of quality, security updates, and support without endless pressure to expand revenue or slash costs.

[Nextgrid]

A lot of the pressure to expand revenue comes from within thanks to the flaws of permanent employment - you hired permanent employees at a discount compared to the equivalent contractor/temporary workforce in exchange for a promise of perpetual employment. These people will thus do their best to ensure their perpetual employment (they will never say "hey I think we've finished building your product, now you can lay us off to make profit").

You can of course sidestep that and use contractors for the initial build out - plenty of agencies and freelancers will give you a quote with various terms. It'll cost way more in the short term because you're essentially paying upfront the years of salary they would otherwise earn building the same thing as permanent employees, but at least it's an upfront, honest transaction with no expectation of loyalty. You can then hire a permanent skeleton crew for the continuous upkeep.

Want a turnkey Vimeo you can deploy on a cloud or truckloads of servers you can just rack up in a colo? If you have a spare 1.4B laying around, I'm sure that can be arranged.

[MrDarcy]

Terrible for those laid off but perhaps not for Evernote customers if it means there isn’t unwelcome feature creep.

[CiccioNizzo]

Been a paiyng Evernote customer since its launch. I unsubscribed at the beginning of 2025 after 7/8 years of shitty releases, not fixing old bugs, and new useless features.

[criddell]

I don't user Evernote very often, but I have a bunch of stuff stored in there and use it basically in a read-only mode. For a long time I was able to get the $36 / year plan which I felt pretty good about. It was a great app and service which I didn't use very much, so that felt like a fair price and I felt good about supporting them at that level. Basically every time I opened Evernote, I was paying $2.

But then the price tripled and for me, it's too much. I'll pay $2 per session, but not $5.

I remember their CEO (Phil Libin I think) on their podcast explaining how they were building a 100 year company. I really wanted to believe that.

I use Obsidian now and like it, but it feels like they are going down the same path. They keep adding features that don't really fit the original editor-for-a-folder-of-markdown-files. I wish they would stop.

It's a bummer but the feature treadmill seems inescapable. Bending Spoons will probably be able to buy Obsidian for a very nice price in a few years and the Obsidian founders will do very well.

[philipallstar]

If everyone gets salaries and equity is paid for then everyone's done great. And then we can build another one, or an open source equivalent once all the money's been spent researching useful features, and then we're done.

[criddell]

I wouldn't classify a small number of people with equity scoring big and millions of users losing out as everyone doing great.

[DonHopkins]

Just unmitigated bug and software rot creep.

[johnnyanmac]

It's worse. When a company like this is "mature", they don't try to appeal to new users. They instead squeeze what they can out of the existing user base, because that user base is probably already dying off. This isn't about attaining a steady state business, its about seeing how much of the toothpaste you can still squeeze out the bottle before it crusts up.

This practice is derogatorily called "vulture capitalism" for a reason. I hope the remaining engineers are either lining up for retirement or networking around for their next gig.

[gtowey]

> Their goal might be be to acquire, dramatically cut costs, and then run the product for as long as they can at a profit before breaking it down and selling it off

In the 80's people who did this were known as "corperate raiders". Nowadays it's just called business.

[thatguy0900]

I've heard vulture capitalist used to refer to that too

[t1234s]

"corporate raiders" are a definitely real thing.

[everfrustrated]

That usually means stripping the company for parts. Bending Spoons is just trying to run the company sustainably.

[munk-a]

Vimeo employed somewhere north of a thousand people a year ago with 28% being in the engineering team (according to random google results - this isn't an area I have personal knowledge of). If they dropped from around 300 people to 15 that sounds like gutting - not trimming.

[everfrustrated]

They will be hiring up but not the same people. Bending Spoons tends to replace high silicon valley wages with high Italy wages which is a considerable saving.

[johnnyanmac]

This is why I can't take any anti-immigration sentiments seriously in this country. An american founded company runs a business for 20 years, sells it off overseas, and the new owners kick all Americans out of the equation.

Response from America: "well that's just business, I guess". It was never about preserving American labor.

[kelnos]

Typical bean counters, firing all the people with institutional knowledge up front, and then hoping their cheaper labor can figure things out.

Meanwhile, the users are the ones who lose out. Classic.

[horsawlarway]

It sounds like they're trying to extract as much money as possible from a SaaS subscription service that's no longer actually paying any devs.

From my perspective as a one-time (but no longer) paying user of evernote - WTF am I paying for monthly if not to support a dev team?

Seriously - I get that there are infra costs for some of the services, and I wouldn't mind paying those costs plus a reasonable upcharge, but I'm sure as fuck not going to pay a company $100+ a year subscription to store under a GB of data.

So now I host bookstack and I pay backblaze ~$0.22/m to back up all my notes, which is much closer to real costs for these services if they're not under development.

[tombert]

Genuine question, why not use a free Git service or something

I pay for Sourcehut now, but until recently I was using a free private GitHub account to sync my notes in Obsidian. It works fine and cost me nothing (at least nominally).

[horsawlarway]

The honest answer is because I backup a large number of other things to backblaze anyways.

I went on a mission about 5 years ago to essentially stop paying for SaaS services if there was an opensource alternative available that I could self host.

I have old machines lying around anyways since I was upgrading about every 5 years for gaming. So I have a 5 node k8s cluster in my basement serving about 20 different services that I use, and I no longer pay for basically any subscription software.

Git is fine for text content, (hell, I have about 25 personal repos on github anyways, although speaking of... most are mirrored to a local gitea instance) but it's not a great solution for backing up DBs, binary data, media, photos, etc...

Eventually - I'll likely replace backblaze with a NAS at a family member's house, but for now - it's very cheap and the billing is fair (usage based billing, not the exorbitant monthly fees most SaaS services charge).

---

Plus - I really like the flexibility of web based services. I don't have to remember to sync anything with bookstack, I just hit 'https://bookstack.[mydomain]' in a browser from any machine I want - Friends house? works. Public library? works. Wife's phone? works. Work laptop? works. etc... you get the idea.

Even after accounting for the initial outlay for a large NAS and my extra power consumption - I broke even in just under 3 years self hosting. Turns out SaaS is sorta a scam if you're technically capable.

And absolutely more power to ya for finding your own alternative solution!

[tootie]

Corporate raiders is a bit of a different concept. That implies a hostile takeover. Like aggressively buying up shares in order acquire a majority stake and set company policy against the wishes of other insiders.

Bending Spoons is what we'd call vulture capitalists which have and continue to exist. Basically they buy weakening businesses and carve them up for parts, selling anything of value and squeezing max revenue of whatever is left.

[Aunche]

> Basically they buy weakening businesses and carve them up for parts, selling anything of value and squeezing max revenue of whatever is left.

People say this like it's a bad thing, but without "vulture capitalists", struggling companies would default and banks would attempt to do the same, except they are much worse at it and even more people would lose their jobs.

[usrusr]

What's hard to understand? They switch the companies from growth (no matter the cost) to revenue extraction (even if it will eventually fade)

Minimum viable cost of keeping the lights on. And sometimes they even compromise a little, "let's spend a tiny bit more and see how much growth we can get from that"

[nness]

Not the concept, how it can be profitable given the price of their acquisitions.

[bradleybuda]

HN: VC is a cancer, businesses don't need to grow forever at all costs, products can be finished, what we need is sustainable small companies

Also HN: No, not like that

[dotBen]

If your comment is referring to the bending spoons business model, it's worth pointing out they are not VC, they are private equity.

If your comment is referring to the software company's exiting to provide a return to shareholders, that happens all the time whether it's venture-backed or privately owned. The owners of privately held bootstrapped companies still want an exit one day too.

As an open source software engineer who is now a venture capital investor, respectfully, I think your beef is with capitalism, not with the institutional investors.

[bicepjai]

Not in the startup world beyond what I pick up on HN, but this distinction was helpful. My mental model going forward: - If a company is still validating the business model and optimizing for rapid growth, it’s typically a Venture Capitalist (VC) fit. - If a company is already established and the play is to improve operations, scale, or restructure (often involving a change of control), it’s typically a Private Equity (PE) fit.

[lotsofpulp]

Publicly listed companies buying businesses would be a third “fit”.

[_DeadFred_]

Reminder that restructure often means a company working just fine, but whose assets outstrip what PE can buy it for, so they strip it to the bones. Or they leverage it with debt against assets then pay that money to themselves for consulting, account/hr services that they force the company to outsource to other PE companies. Nothing is 'created' through this process, no value created/added, nor it is healthy capitalism as the company could have continued fine without this added leveraged debt that was purely used to profit PE.

[Imustaskforhelp]

Alright, so is vimeo finished product then?

Why not come out and say this?

Also another thing but other comment https://news.ycombinator.com/item?id=46707699#46709164 points out how Vimeo wants to replace SV engineers with Italian engineers to save money.

They are a first and foremost private equity company, Don't forget. There's no loyalty to any group.

[epolanski]

They don't replace engineers with engineers, they just put enough staff in place to leave the machine working.

And yes, they in-house the engineering part, but the fact they are Italian is just because Bending Spoons is Italian and their offices are in Milan.

Bending Spoons pays its own engineers very well, an entry level junior position starts at 75k+ euros, which in Italy is a senior+ engineer salary.

[ecshafer]

The Bending Spoons business model is right out of the private equity playbook. Buy a business with good revenue, cut cost to turn this into a consistent revenue stream, generate annual returns.

This is not like making a small 20 person self funded company.

[bcrosby95]

Imagine a world where you can't complain if something is directionally correct in what you want done.

Me: can you take out the trash? My kid: dumps trash on the front lawn.

Me: people are speeding a lot, can we do something about it? Cops: shoots anyone speeding in the face.

But I guess I can't say anything about it, because they're just doing what I want!

[kelnos]

It shouldn't be surprising that different people on a discussion site have different opinions about the same thing.

[WarmWash]

Comments like the above one refer to community vibes, the types of comments that will get you lots of praise/upvotes.

So while individuals have different beliefs, the "average expected top comment" for communities like HN is usually pretty predictable, and hence the cognitive dissonance of the community on the whole can be called out.

[cheschire]

It’s almost as if HN were a community of voices instead of just one…

[ryoshoe]

The Goomba Fallacy strikes once again

[cheschire]

Thanks for sharing the name of the phenomenon! I was not aware of it before.

[Imustaskforhelp]

This fallacy's pretty cool and first time I Heard of it!

Do you know other fallacies like this which are less known but as interesting (that you or others might know of) probably?

[DonHopkins]

Yes, we're are all individuals! Yes, we're all different!

https://www.youtube.com/watch?v=QereR0CViMY

(I'm not.)

[_DeadFred_]

There are now more private equity funds in the USA than McDonalds. The maximum wealth extraction of every single thing in people's lives is not viable for a continuing healthy society.

https://www.cnbc.com/2025/11/05/private-equity-consolidation...

[Aurornis]

An important clarification if you're not familiar with the industry: A PE firm will often have multiple funds.

There are not more PE firms than McDonalds in the USA.

[Closi]

What if there isn't a feasible path for expansion and growth? Vimeo already has contracting revenue, it's either in the maturity or decline phase.

Some customers will churn, some will stay, Bending Spoons are the masters of this model so will have made an assumption on how revenue will change across the next 5-10 years+, but I would assume that they aren't forecasting extreme growth, and instead are calculating that net profit can be changed from c$30m to c$139m within existing revenue, so if they can keep revenue at/near current levels without growth, they can end up with a much more profitable business.

Bear in mind that same revenue doesn't necessarily mean the same number of customers - it can also mean raising prices and having less customers. Bending Spoons might estimate that if they double prices, half their customers might leave - this would still be BRILLIANT for profit, as while revenue would stay the same, some costs would half, and thus profit might jump from c$140m to c$250m based on some napkin math!

[Beretta_Vexee]

For example, they bought the German hiking and cycling app Komoot. It's a mature app in terms of functionality, with a stable user base. There's little chance of hypergrowth with this type of app. It's also complicated to switch apps because transferring routes, collections, photos, etc. to another service is difficult.

They laid off 90% of the teams. They migrated the app to their infrastructure to pool costs. Since then, there has been no further development of the service.

They are cost killers of the internet.

[alistairSH]

It's also complicated to switch apps because transferring routes, collections, photos, etc. to another service is difficult.

Not really, sync everything through Strava, and then drop whichever service you don't want. Basically any bike ride I've done in the past decade is on 3+ services because they all sync.

[mendelmaleh]

I think by routes he means the trails database, not user activity

[Beretta_Vexee]

Oh I can do it but I am not really representative of the average user.

Plus I have a lot of points of interest, note, picture, that I could request via gdpr but not easy to reuse and couldn't be imported into Strava.

Strava isn't better than Komoot on this regard.

[stabbles]

> Since then, there has been no further development of the service.

That's not true, the website and app both got a major redesign after acquisition.

[Beretta_Vexee]

It is mainly cosmetic and probably due to sharing resources (web template) with their other products. There are no new features.

[mlnj]

What I understand from listening to the management from various podcasts, it was a mix of shipping the most minimum impactful features with the leanest product team needed and then jacking up the price every year for the people that can't move away from these products.

[epolanski]

It's called butt cigar investing or corporate raiding.

They acquire startups and companies without a huge growth potential but modest cash flow and little profits.

They cut the operating expenses to the minimum and jack up the prices to sky rocket profits till their mathematical models will tell them they will profit on the investment.

Rinse and repeat.

[joelthelion]

Have there been any serious legal efforts to make this less profitable? It's very clearly detrimental to society.

[tmp10423288442]

Why would it be detrimental to society? Many companies have developed all the products they're likely to ever develop, so why would you maintain the same level of operational costs as when you expected growth? There's no guarantee that the prices charged before the acquisition were sustainable either.

[joelthelion]

They don't just maintain these products, they enshittify them to extract the maximum possible profit from captive users, until someone else comes in and builds everything from scratch all over again.

This is crazy inefficient yet it's not captured in our economic theories, so we're essentially blind to it.

[johnnyanmac]

Not much you can do. The alternative is bankruptcy that does a similar thing to workers. But it at least doesn't let the company make blatant lies of a PR statement.

The main thing to do is make it so you can't just lay off people as easily as you can in the US for pretty much no reason. But it seems workers are still too divided to really come together and achieve such 9initiatives. Be it unions, pressuring their governments to make new laws, or simply chastising and boycotting companies who engage on such actions.

[Ekaros]

In healthy working free market. There should be competition delivering better product at cheaper price.

Maybe one thing we should do is to allow suing company executives for breach of fiduciary duty when they waste resources on some useless project or feature. This could make many companies more efficient.

Oh and also ban dumping. You should not be allowed to sell stuff below cost of production. Development effort with big maybe ignored.

[ImPostingOnHN]

Private equity (what's being described here) has more political influence than "society" because money.

[johnnyanmac]

Society has more money and way more votes than PE. I'm going to quote A Bugs Life (1998) of all things here:

> Hopper: You let one ant stand up to us, then they all might stand up! Those puny little ants outnumber us a hundred to one and if they ever figure that out there goes our way of life! It's not about food, it's about keeping those ants in line.

In our case, it's more like a million to one

[ImPostingOnHN]

I suspect that the free cash flow of those who seek fewer regulations of this sort on thing exceeds the free cash flow of those who seek more.

People that are being squeezed by PE have less money to wield as political influence partially because they are being squeezed by PE.

The ones doing the squeezing are ok with that.

The people who are uninvolved, who fit into neither box, don't care enough or don't have enough money they're able & willing to part with. They also don't have fancy accountants or corporate accounts to expense it to.

This is the local optimum.

[johnnyanmac]

>The people who are uninvolved, who fit into neither box, don't care enough

That lack of care is going to cost us all in ways we'll be forced to care about one day. Not necessarily for Vimeo, but definitely much more important things that people are ignorant or actively turning their heads against.

> They also don't have fancy accountants or corporate accounts to expense it to.

We call them our represenatives. We expense it to them with our votes (and literal expenses with tax dollars we are forced to part with). But votes require care and we're back in the loop.

[WarmWash]

SaaS is the detriment to society. Static feature software continually updated and changed to create a faux justification for $20 of your money a month, keeping you on an endless treadmill to in order to work with all your old data.

Sometime in the late 00's they realized people were still happily using software from the 90's, because it worked for their needs, and well, we can't have that...

[_DeadFred_]

In the Reagan loving greed of the 1980s this was considered vile, movies were made and the people that did it excluded from polite company.

[epolanski]

This is just how capitalism works in a competitive environment: it allocates capital as efficiently as possible.

I despise their business model, but it is what it is.

[johnnyanmac]

It really doesn't have to "be what it is". We can strive for actual change. But everyone's still too cushy for that, it seems.

[epolanski]

But what actual change do you want when the very founders of these companies like Vimeo, multi-multi-millionaires decide to sell their life's work, customers and workers very well knowing what the fate's gonna be, just to be even more wealthier?

[johnnyanmac]

To summarize what I put in another response: I personally care less about holding the multi millionaire into account (though I wouldn't mind it at all) and more about making sure employees over such deals aren't lied to and then have lives upended at the drop of a hat. Workers and customers do not in fact "know what the fate's gonna be" and that's the problem to address.

I won't repeat the same usual solutions again, but I'll mention one thing that already exists: the WARN act. The spirit of this is good, to give employees a 3 month buffer of when their job is ending. But it's clearly abused at worst, and not enforced at best. It's not as good as other countries' worker rights, but ot exists today to be looked at. In addition, severance can help to. This is standard, but even the "generous packages" in the US tend to be on the lower end of what other countries need to do.

Basically, it shouldn't be a drop dead easy decision for a company to mass layoff and have the workers surprised at the facs. It needs to both be slowed down and give immediate short term costs. That's a start of "kinda actual change" to strive for.

[jlarocco]

> I don't understand this model. Such significant layoffs would indicate that there is no real appetite for expansion or growth.

To play devil's advocate, maybe there's a point where a product or service needs to stop evolving and just be.

I have a Vimeo account that's been on auto-resubscribe for years. I couldn't tell you a single feature they've added in the last 5 years, but they host my videos, collect stats, and let me send links to my friends, and that's really all I want.

[CodeWriter23]

> customers of a depreciating SaaS product surely churn after a 1-3 years, so they wouldn't make enough of a return

You might think that. Then there's Earthlink and AOL still collecting $5 or $6/mo per mailbox as their cash cow.

[everfrustrated]

They recently bought AOL too!

[CodeWriter23]

I was unaware, thanks for the update.

[afavour]

I imagine a lot of companies have contracts with Vimeo and switching costs are real. They'll likely stick with Vimeo if they manage to maintain their offering to the level it exists at today. In the long term I think it guarantees death but they will be able to extract plenty of money before that happens.

[sublinear]

The long tail of revenue is not only a substantial sum, but decays more steadily than growth. This is a low risk investment that still turns a profit.

It's also not their only investment or even necessarily their own money. Individual holding companies don't tell you much about the larger pool of money they come from.

[didacusc]

They did the same thing with Komoot and other apps. I don't understand where the money comes from and how they are planning to keep this portfolio growing.

[agentcoops]

It seems to all be debt financed, i.e. just a private equity model slightly specialized for tech. The "innovation" is that Bending Spoons has an in-house engineering team it seems they try to keep constant yet scale out to all the acquisitions. I hadn't looked into them much before, but https://www.colinkeeley.com/blog/bending-spoons-operating-ma... is an interesting report -- though not focused on the finance side.

[danelski]

(For Komoot) Did they, though? I am aware of the layoffs, but after that they slightly redesigned the app, collected the poll for next year's requested features, the lifetime maps option is still there to buy etc. If not for HN, I wouldn't have noticed any change in the direction that it's going in.

[bombcar]

I suspect that the VAST majority of users want their saas tools to do today what they did yesterday, and so stopping active development of new features is actually a positive - no sudden Liquid Ass is going to appear in a program in maintenance mode.

[tetris11]

It's a vampire economy. No one has any new ideas

[ratelimitsteve]

you're absolutely right, they're not positioned for expansion or growth. you're very close to seeing the private capital dark pattern that's become a huge part of our economics lately. let me illustrate for you how they make money by decoupling the company's success from the investors' success

1) borrow a bunch of money to buy the company - this is called a leveraged buyout

2) once you're in control, have the company assume the debt you took on in order to buy it. you as the buyer are now free and clear, and the company is now responsible for paying back the money you borrowed to buy it. the end result of this transaction is that the company now owns stock that is less desirable because the company is more leveraged

3) make huge cuts everywhere and use the money "saved" by divesting from your own future to pay yourself as a consultant

The company is now in the extremely fragile position of not being able to spend to respond to the market because all of their income is going to servicing debt and paying the members of the private capital group. the "investors" aren't actually invested at all because even if the stock they hold becomes worthless they didn't pay anything for it in the first place, the company did. the thing limps along for as long as it can keep bringing in some small amount of income for the "investors" to skim off the top of, then it inevitably dies like anything riddled with parasites will, the company declares bankruptcy and they sell the copper out of the walls in order to pay back the loan used to take the company private in the first place

[j45]

Sometimes solutions end up solving problems that don't need constant featuritis.

Maybe they're deciding to maximize locked in revenue and margin.

Laying off so many people doesn't seem signal the greatest confidence to the market, maybe they'll explain it as some kind of efficiency alignment.

After all, Twitter is still operating on some level after 75% layoffs?

[Recursing]

My best guess is that a part of it is replacing US (or in this case Israeli) devs with much cheaper Italian/European ones, earning ~a quarter of their US counterparts and working longer hours, as Bending Spoons has an extremely competitive hiring process, and is probably the highest paying tech company in Italy

[ragall]

Actually they're paying very competitive salaries. For example: https://jobs.bendingspoons.com/positions/67c6dc18c70c531d6db....

[IshKebab]

I can't see any salaries there but presumably they're going to be competitive for Europe, which is roughly half the competitive salary in America.

There are plenty of competent devs outside America. I can't see any reason why you'd want to pay American salaries if you're a global company.

[throwaway2037]

    > Typically, we offer individuals at the start of their career an annual salary of £85,797 in London and €66,065 elsewhere in Europe.

That would be excellent pay for a junior engineer in Italy.

[nness]

An annual salary of £85,797 in London for a junior is impressive, too.

[SkiFire13]

AFAIK that's what they offer to juniors straight out of university and usually even give a substantial pay rise after the first year. I don't know other places in Italy that can match that.

[Beretta_Vexee]

They are also very good at pooling their infrastructure and software stack. This accounts for a significant portion of the costs.

[AznHisoka]

This is just my personal opinion, but if they didnt change the price of Evernote and never made any changes, I probably would remain a customer for a very very long time. There is a high switching cost for me to use any app to move all my docs, and notes.

I dont know if the same can be said for Vimeo, though

[egypturnash]

I would still be a happy Evernote customer if they hadn't rewritten all the apps from scratch.

[mynameisjody]

You're assuming all or most paying customers are paying attention. That is sometimes not the case. For example folks/businesses who forgot they signed up. Alternatively it could be that the cost to switch is too painful.

[bachmeier]

One of the advantages of their business model is that it's low risk. Find a business you can get cheap enough, shut off all investment related to growth or product improvement, and use the product's moat to get as much cash as possible from current customers. Business doesn't have to be about expanding into new markets or growing revenue. If I had to guess, there's not much of a market for the companies they're acquiring because everyone else is looking for growth.

[stefan_]

Its just private equity for software

[reactordev]

The growth comes from increasing subscription value, not from adding users. They bet that the platform is sticky enough for the users that they’ll slowly boil the frog until there’s no more equity left.

[muzani]

Startups focus on building assets, not revenue or profit.

Companies like Bending Spoons focus on buying these assets and turn them into $$$$$$$$, not sustainability or growth.

[lumost]

Are these hostile takeovers? buying a competitor out through a PE deal could be cheap relative to competing with them.

[WJW]

No, they just come in and offer a lot of money to the current owners. Bending spoons are ruthless businesspeople but AFAIK they do offer a reasonable price for the businesses they acquire.

(I used to work for WeTransfer and some time after I left it got acquired at about the price it was once considering IPO-ing at. This was apparently such a good offer that it took very little deliberation to agree to the deal.)

[lumost]

but where does the money come from? it seems like a good way to avoid regulatory scrutiny if your acquisition goal is to simply exit a competitor from the market.

[rcxdude]

The money comes from investors. Private Equity basically works by taking money from investors to buy companies and turn a profit with them, paying back the investors when they do so (it's a very illiquid and risky investment, so the advertised returns tend to be higher, but it does seem like a lot of firms are struggling to actually make it work).

[lumost]

Aye - it’s a simple business model, which seemed to work well in an era of low interest rates. However some of these tech buyouts seem quite myopic, making it almost appear like the goal was to shutdown the company.

[WJW]

You really seem to want to believe Bending Spoons buys companies just to shut them down, for reasons that are not entirely clear unless you believe that they're owned by a secret conspiracy made out of note-taking, file transfer and video hosting companies that is willing to engage in a multi decade plot to very slowly buy out competitors. They then shut down the acquired businesses for no clear benefit, even though they're still profitable and new competitors could easily start up. So this conspiracy (if it exists) would be very slow and not very effective in keeping down competitors, especially compared to all the other things the conspiring companies could be doing.

Each individual company Bending Spoons acquires has a limited lifespan, so if you only look at a single deal it can indeed look myopic. But the whole point of their business model is that they use the cash flow thrown off by the acquired businesses (which are much more profitable for a short while due to firing 75% of personnel) to fund the next acquisitions. This can keep going on indefinitely, or at least until there are no more businesses to acquire.

[hedgehog]

Basically a loan.

[Fnoord]

It is called bait and switch.

And the company name referring to bending spoons (Uri Geller) gives away the way they see themselves.

[pc86]

Bait and switch is something completely different.

If you started buying Evernote 10 or 15 years ago, and use it a lot, then Evernote gets acquired and the terms change, that's shitty but is not remotely a "bait and switch."

[dingnuts]

You bought a relationship with a service company that locked you in and sold you out. That's absolutely a bait and switch, just one of service instead of goods, because it's a SaaS company.

This is the real reason I'm tired of subscriptions. I don't even care about the "pay in perpetuity" problem in some cases, I just don't want the entity I chose to do business with to completely change.

That's absolutely a bait and switch.

[huhtenberg]

According to Wikipedia, the name is a reference to that scene from The Matrix.

[nine_k]

So it's sort of a "white-dwarf maker" company. Pick a company with a steady cashflow, eject all the fluff that made it a big star, and collect the remaining energy / cash until the core cools down. The end state is a cold slab of iron, and nothing new is going to happen to the acquired business ever since, but the plentiful (if dwindling) cashflow will be collected without any obstacles.

[huhtenberg]

> appetite for expansion or growth

This requires reinvesting profits into the company. It sounds like they choose not to do that, but instead switched to cashing in.

If the profits are stable and supported by a fraction of the workforce, then why keep the rest around? Clearly a shitty thing to do, but business-wise it makes sense.

[nradov]

Vimeo isn't really SaaS though.

[dbbk]

Of course it is?

[observationist]

Look at the companies they're acquiring - it's 100% about getting user data and tertiary monetization, and they're making bank. They couldn't care less about what the companies they buy supposedly do.